According to a statement from the Dutch Fiscal Intelligence and Investigation Service (FIOD), law enforcement in Amsterdam have arrested an unnamed 29-year-old suspected of developing the ethereum blending application Tornado Cash. The FIOD has arrested the suspect, accusing him of “concealing the flow of criminal funds through the blending of cryptocurrencies and facilitating money laundering.”
Dutch law enforcement detains Tornado Cash deb suspect, authorities hint at possible future arrests
Four days ago, the Office of Foreign Assets Control (OFAC), a watchdog agency of the U.S. Treasury Department, banned 44 ethereum-based addresses associated with the ethereum blended application Tornado Cash. Now, Dutch law enforcement authoritieshave revealed that the FIOD has arrested a 29-year-old unidentified person who allegedly developed Tornado Cash. A press release issued by Dutch authorities noted that the suspect will be brought before a magistrate and further suggested that “multiple arrests are not ruled out.”
According to Dutch investigators, Tornado Cash has recorded sales of approximately $7 billion since 2019, and law enforcement believes that “at least $1 billion worth of crime-derived cryptocurrency has passed through the mixer.” The identities of the individuals have not been revealed by authorities in Amsterdam, but Dutch authorities stress that “sophisticated technologies such as decentralized organizations” receive special attention from FIOD if they are suspected of money laundering activities.
The FIOD press release adds.
The persons behind this organization are suspected of profiting from these transactions on a large scale.
The suspect’s arrest follows the celebrity window dressing and Github ban
The arrest follows OFAC’s announcement of the ban on August 8.” The following entities have been added to OFAC’s SDN list: Tornado Cash” details OFAC’s cyber-related designation report. Subsequently, a couple of developers who were working on the open source Tornado Cash codebase via Github had their accounts suspended and several commits were erased from the software repository. Additionally, centralized crypto business operators like Circle have frozen addresses allegedly related to OFAC’s Tornado Cash ban.
After the Github outage and assets were frozen, a rare development occurred in which anonymous Tornado Cash users sent small fractions of Ethereum (ETH), known as dusting, to a very large number of celebrities and high-profile companies. Celebrities like Snoop Dogg, Steve Aoki, Logan Paul, and Beeple were dusted along with organizations like sneaker company Puma and Ukrainian donors.
A Puma spokesperson explained that the company received approximately 0.075 ether transaction.” Puma has no business relationship with Tornado Cash and had no prior knowledge of the payment. The matter is currently under investigation,” a Puma spokesperson explained to the Wall Street Journal.
Treasury officials claimed Tornado Cash “repeatedly failed to apply effective controls,” OFAC’s Tornado Cash press release noted in a takedown of mixer Blender.io
Brian Nelson, the current Under Secretary of the Treasury for Terrorism and Financial Intelligence, explained on Monday that Tornado Cash had failed to comply with regulatory policy.
“Despite its public statements to the contrary, Tornado Cash regularly and repeatedly imposes effective controls designed to deter money laundering for malicious cyber actors, without basic measures in place to address the risk, Nelson stated. “Treasury will continue to aggressively pursue action against mixers that launder virtual currency for criminals and those who support them.” added the Treasury investigator. U.S. authorities also noted the takedown of mixer Blender.io.
Tornado Cash has received a lot of media attention, but back in May, Blender.io was the first cryptocurrency mixing application sanctioned by OFAC. Similarly, OFAC claimed that Blender.io was regularly used to facilitate criminal transactions. Treasury detailed that North Korean hacking syndicate Lazarus Group used the mixer to obfuscate $620 million in crypto funds stolen from the Ronin bridge hack (Axie Infinity) OFAC has linked Tornado Cash transactions to also linked to the Lazarus Group.
OFAC added several crypto addresses to its SDN list in April; in addition to Tornado Cash and Blender.io, a US citizen was arrested and sentenced to prison for violating North Korean sanctions. Former Ethereum developer Virgil Griffith was found guilty of one count of conspiracy to violate the International Emergency Economic Powers Act (IEEPA). Griffith spoke at a blockchain conference in the Democratic People’s Republic of Korea (DPRK), where Griffith was charged with aiding an enemy state for allegedly giving the DPRK “technical advice on using cryptocurrency and blockchain technology to avoid sanctions.”
What do you think about the Tornado Cash situation and the U.S. government’s recent crackdown on crypto-mixed applications? Let us know what you think about this subject in the comments section below.
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